Picture: INTU
Picture: INTU

A consortium led by UK billionaire John Whittaker has been given two more weeks by the board of Intu Properties to make a firm offer for the under performing real estate company.

If the takeover goes ahead fresh management will likely be brought in to turn around the London Stock Exchange and JSE listed company which has a significant South African shareholding.  

According to Evan Robins, portfolio manager at Old Mutual Investment Group, Whittaker and his team are trying to take control of Intu so that they can bring in new management that will get strong returns form Intu’s highly rated portfolio, which includes the top 10 malls in the UK and strong malls in Spanish tourist towns.

He added that a two-week extension would not necessarily make a takeover more likely but it would allow the consortium to raise more funds and come up with a higher offer if it wished to.

“I think shareholders have expected Intu’s management to change in the next few months. [CEO David] Fischel, who is one of the longest standing CEOs in listed property, is leaving and management is expected to go with him. The idea would be to bring in fresh people who can bring momentum to this company and find better ways of getting its mostly strong assets to perform,” said Robins.

Fischel will leave his job at the end of the year, having been CEO  since 2001. No replacement has yet been announced.

The consortium now has until 5pm UK time on November 15  to make a firm offer to buy out Intu, which owns malls in the UK and Spain. It has made two previous expressions of interest in Intu, but no formal offer has been made. It initially had until November 1 to make a firm offer.

The consortium includes private equity entity Peel Group, of which Whittaker owns about 75%; Saudi investment group Olayan; and diversified global real-estate group Brookfield Property Group. Olayan and Peel Hunt already own 29.9% of Intu.

Should the consortium make a firm offer, it is possible it  will be higher than the £2.9bn it said it was willing to pay earlier in October. The consortium initially offered 205p per Intu share on October 11. On October 19 it increased its offer to 215p per share, a premium of 21% to the stock’s closing price the day before.

Intu’s board recommended that the UK’s Panel on Takeovers and Mergers grant the consortium more time to make an improved offer or to make its current interest firm.

Intu has been a takeover target for some time with Hammerson, which owns shopping malls and retail parks in Europe, making a bid for the group in December 2017. Hammerson abandoned its £3.4bn bid in April, saying a deterioration in the UK retail property market and concerns about a lengthy merger process meant a deal was no longer worth pursuing.

Peter Clark, a portfolio manager at Investec Asset Management, said should the 215p per share offer from the Whittaker-led consortium become firm and go ahead, Intu’s investors would benefit. 

“The potential cash offer is certainly welcomed as an opportunity to realise value in the shares in an environment with a challenging fundamental backdrop. The sentiment towards UK retail remains highly negative, which is further compounded by the high level of gearing in Intu,” he said earlier in October.

Intu, which was formed out of a portion of South African financial services group Liberty’s UK property assets nearly a decade ago, saw its asset base lose £298m between July and September this year as some of its key tenants struggled to make rental payments, a trading statement showed.